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Mumbai property market gets it mojo back after coronavirus lockdown

Up to 20 residential transactions registered in June at India’s priciest real estate market are valued at over Rs 10 crore.

Property buyers came out of hiding in Mumbai, India’s priciest real estate market, to boost the sagging fortunes of a segment crippled by the coronavirus lockdown.

A raft of transactions for commercial and residential properties were finalised in the Mumbai registration and stamp duty department after it reopened for business on May 18.

At least 1,642 documents such as agreements of sale, mortgages and tenancy as well as sale deeds valued at Rs 176 crore were registered in May and June, according to data shared by the stamp duty department of Mumbai.

Though many of these agreements were simply waiting to be signed after the registration and stamp duty department reopened, the pace of deals signals a recovery in the Mumbai real estate market.

Compare the May and June deals with the transactions before the lockdown. Up to 4,073 documents were registered and Rs 194 crore collected in March before the lockdown. In April, when the lockdown set in, there were zero registrations, an unprecedented event in Mumbai, India’s financial hub and India’s richest municipality.


Roughly 20 residential transactions registered in June were valued at more than Rs 10 crore, brokers in the know told Moneycontrol. Below are the notable deals:

1. Romesh Sobti, a former managing director of IndusBank, bought two sea-view apartments in Oberoi Realty’s uber luxury project in Mumbai’s Worli at Rs 38.15 crore. These properties were registered at Rs 4.60 crore each.

2. In June, a buyer bought a property in an Indiabulls project in Lower Parel for Rs 15.2 crore and registered it for Rs 76 lakh.

3. A unit in a project named The Residences by Runwal Developers in Malabar Hill was sold for Rs 25.47 crore and registered for Rs 1.27 crore in June, brokers privy to the registration details said.

4. A 3,261 sq ft property in Artesia project in Worli by K Raheja Corp was bought for Rs 19 crore and registered for Rs 95 lakh, according to brokers.

In housing, the number of registrations bounced back by 33 percent with 1,250 transactions in June. In value terms, these sales are worth roughly Rs 1,920 crore, said people familiar with the matter. The Mumbai registration and stamp duty department also amassed Rs 2,581 crore in 2019-2020 compared with the targeted Rs 2,630 crore for both commercial and residential properties.

That was fast

As it happened, housing deals began on a strong note at the start of the year. In January and February, there were 4,300 and 4,250 transactions — 6-8 percent higher than the monthly average — valued at around Rs 5,750 crore each, according to statistics by CRE Matrix, a real estate intelligence firm.

The transactions halved to 2,500, or Rs 3,000 crore, in March 2020 as a slowing economy and coronavirus fears smothered the market.

“The uptick in transactions is promising given that we are still grappling with the COVID-19 pandemic and a vaccine is yet to be found,” says Abhishek Kiran Gupta, CEO of CRE Matrix.

But there is a caveat …

A section of industry experts said some of the deals registered after reopening may have already been finalised earlier and both buyers and sellers may have been waiting for the sub-registrar offices to reopen. Some deals may have been the result of discounts or incentives offered by developers for a limited period, they said.

Several property transactions were closed in the last quarter of 2019 but registrations were still pending. “The registration taking place now do not mean that the deals are taking place during COVID-19. As many as 60 percent of registrations concern deals that may have taken place pre-COVID,” said Ritesh Mehta, Senior Director & Head - West India, Residential Services, JLL India.

A buyer is usually given three to six months to make payments and register the property. Registrations that were to take place in February and March had to be postponed on account of COVID-19 and the subsequent lockdown. “Those registrations are taking place now,” he said.

In March, the Maharashtra government said it is reducing stamp duty on properties by 1 percent (from 6 percent) for Mumbai, MMRDA Region and Pune for two years.

Around 63 percent of the sale transactions in the Mumbai Metropolitan Region (MMR) during FY20 were at a 20 percent premium to ready reckoner (RR) rates, according to a recent study by Propstack, a data analytics firm.  Propstack analysed ready reckoner premiums in MMR based on 38,000 sale transactions.

Around 8 percent deals during the year-ended March were below the RR rates. The highest percentage of transactions, below the RR rate, were in south and central Mumbai at 23 percent and 16 percent, respectively, according to the data.

RR rates —  also known as circle rates or guidance values — are the minimum values set by a state government below which a property cannot be registered. Each area within a city has its own RR rate on which stamp duty is calculated.

To align circle rates with the actual market prices, most state governments previously regularly reviewed and increased the RR rates in cities either year-on-year or in two years. However, market values increased only marginally in the same period.

Another report by real estate consultant ANAROCK said the average housing price quoted by developers across major cities are higher by 6-75 percent than the government's circle rates, the value at which stamp duties are paid and properties registered.

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Vandana Ramnani
first published: Jul 11, 2020 02:37 pm
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